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Author: 

Mechanics  and  Metals 
National  Bank 

Title: 

The  shipping  board  and 
our  merchant  marine 

Place: 

New  York 

Date: 

[1921] 


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The  Shipping  Board 

and  Our 

Merchant  Marine 


ESTABLISHED  1810 


The  Mechanics  &  Metals 
National  Bank 

of  the  City  of  New  York 


Er 


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MWG 


LIBRARY 


School  of  Business 


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The  Shipping  Board 

and  Our 

Merchant  Marine 


ESTABLISHED  l8lo 


The  Mechanics  &  Metals 
National  Bank 

of  the  City  of  New  York 


t^mtt^^a^m^aaiL: 


.  K   A  h^     *, 


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<1 


Foreword 

THROUGH  the  power  of  its  own  huge 
fleet  and  the  influence  of  its  policies 
and  decisions  upon  the  development  and 
operation  of  the  entire  American  mer- 
chant marine,  the  Shipping  Board  consti- 
tutes an  important  factor  in  the  economic 
situation  of  the  United  States.  It  bears 
upon  the  disposal  of  the  surplus  products 
of  our  industries,  upon  our  international 
trade  and  political  relations,  and  upon 
taxation  and  national  income. 

With  the  purpose  in  view,  therefore,  of 
making  available  to  the  customers  and 
friends  an  analysis  of  this  situation  that 
may  enable  them  to  judge  better  the 
merits  and  importance  of  future  develop- 
ments, we  present  the  following  review  of 
the  functions  and  duties  mandated  to  the 
Board  and  of  the  chief  problems  which 
now  confront  it. 

The  Mechanics  &?  Metals 
National  Bank 

of  the  City  of  New  York 


Decemhery  ig2i 


3 


11'  . 

VI 


The  Shipping  Board  and  Our 
Merchant  Marine 


Copyright  192 1 
The  Mechanics  &  Metals  National  Bank 


UNTIL  the  middle  of  the  last  century  our  Atlantic 
States,  dependent  upon  trade  with  older  countries, 
and  upon  distant  sources  for  many  of  their  require- 
ments, developed  a  race  of  mariners,  built  the  finest  ships, 
sent  the  American  flag  into  every  port  of  the  world,  carrying 
the  bulk  of  our  foreign  commerce.  Then  came  the  develop- 
ment of  our  western  territories  and  the  increase  of  our 
industrial  capacity.  New  and  greater  profits  from  the 
investment  of  money  and  energies  here  led  our  interests 
away  from  the  sea.  The  Civil  War,  and  the  competition 
of  other  nations  themselves  facing  the  urgencies  of  overseas 
trade  and  colonization,  contributed  to  the  rapid  reversal 
which  occurred  in  our  marine  position. 

Now  the  tide  has  turned  again,  accelerated  by  war  but 
nevertheless  inevitable.  A  surplus  of  products,  inter- 
national competition  for  world  trade,  have  of  necessity 
sent  us  back  to  the  sea.  But  a  merchant  marine  cannot 
exist  of  itself;  it  is  no  more  than  a  tool  of  commerce,  a 
means  by  which  an  end  may  be  achieved.  Its  problems 
are  in  the  last  analysis  the  problems  of  commerce,  and 
artificial  aid  without  appreciation  of  these  problems  can 
give  but  an  artificial  stimulus.  We  will  keep  on  the  sea  not 
through  such  aid  but  by  the  development  of  a  broad 
national  policy  of  encouragement  to  foreign  enterprise  of 
which  the  maintenance  and  operation  of  our  fleet  is  but 
one  important  part. 

Though  the  economic  forces  demanding  maritime 
strength  had  been  gathering  momentum  before  the  war, 
no  real  national  shipping  policy  had  begun  to  develop — 
except,  perhaps,  the  deadening  effect  of  restrictive  labor 
legislation.    With  the  early  years  of  the  war  these  forces 


i 


were  emphasized,  yet  in  our  maintenance  of  strict 
neutrality  we  withheld  any  pronouncement  of  policy  until 
the  Shipping  Act  of  191 6  in  accordance  with  which  the 
Shipping  Board  was  first  established. 

A  brief  period  of  nominally  peace-time  regulation,  prior 
to  our  declaration  of  war,  was  followed  by  a  purely  military 
development — a  period  of  ships  and  more  ships,  built 
primarily  to  carry  munitions  and  supplies  and  only  in- 
cidentally to  meet  future  commercial  competition.  After 
the  Armistice,  the  first  national  reaction  was  still  military 
— a  determination  never  again  to  be  without  a  merchant 
marine  as  a  war  auxiliary.  Then  came  the  renewed 
expression  of  our  earnest  resolve  to  have  a  fleet  to  carry 
our  own  goods— the  Merchant  Marine  Act  of  1920.  This 
act  strengthened  and  clarified  the  policies  outlined  in  191 6 
and  took  account  of  the  problems  presented  by  the  huge 
Government-owned  fleet  which  in  the  meanwhile  had  come 

into  existence. 

Thus  on  a  foundation  of  peace-time  legislation  designed 
to  encourage  a  normal  and  gradual  development  of  the 
American  merchant  marine,  there  was  reared  the  colossal 
shipbuilding  and  ship  operating  structure  necessitated  by 
the  abnormal  demands  of  our  participation  in  the  war. 

From  a  regulatory  body  the  United  States  Shipping 
Board  expanded,  parallel  with  the  development  of  our 
entire  war  program,  into  an  organization  several  hundred 
times  greater  in  its  responsibilities  and  scope  than  the 
greatest  private  shipping  enterprises  had  attained  after 
years  of  development.  On  the  extent  and  rapidity  of  its 
achievement  depended  the  outcome  of  the  war.  That  the 
full  measure  of  its  accomplishment,  expressed  in  completed 
ship  tonnage,  came  after  the  cessation  of  hostilities,  does 
not  discredit  the  value  of  this  accomplishnient;  the 
indications  are,  rather,  that  the  promise  of  its  entire 
program,  the  definite  assurance  of  its  increasing  contribu- 
tion to  Allied  munition  transport,  exercised  a  powerful 
moral  eflPect,  hastening  the  conclusion  of  the  conflict. 


There  is  to  be  no  attempt  made  to  review  here  in  any 
detail  that  part  of  the  war  program  which  was  delegated  to 
the  Shipping  Board.  That  it  constituted  a  colossal 
achievement  cannot  be  fairly  denied.  As  a  war  measure 
it  used  up  money;  likewise  it  used  up  men,  both  physically 
and  politically.  Whether  the  waste  and  inefficiency  in  its 
operation,  bearing  in  mind  that  time  was  the  essence  of 
the  contract,  was  proportionately  greater  or  less  than  in 
other  parts  of  the  war  program,  need  not  be  discussed. 
That  chapter  is  finished. 

But  the  liquidation  of  the  shipping  program  is  not 
finished;  it  could  not  have  been  completed  in  any  measure 
of  satisfaction  within  this  time  under  any  probable  com- 
bination of  circumstances.  Yet  in  this  question  of 
liquidation  lies  the  crux  of  the  immediate  Shipping  Board 
problem.  To  what  extent  was  liquidation  accomplished 
before  the  advent  to  the  Board  of  the  present  personnel  ? 
What  are  the  ramifications  of  the  problem  which  confront 
this  Board  and  how  is  it  meeting  them?  What  eff'ect 
will  their  decisions  and  the  decisions  of  Congress  have 
upon  the  future  status  of  the  American  merchant  marine  ? 

For  the  purpose  of  setting  up  a  somewhat  comparable 
example,  let  us  suppose  that  the  war-time  governmental 
administration  of  the  railroads  had  been  delegated  to  the 
Interstate  Commerce  Commission.  Suppose,  further,  that 
this  body  had  found  it  necessary  as  a  war  measure  to 
insure  the  movement  of  troops  and  supplies,  to  construct  a 
hundred  thousand  miles  of  new  railroads  paralleling 
existing  lines.  The  Interstate  Commerce  Commission  is  a 
regulatory  body.  It  has  a  record  of  achievement  in  this 
field.  But  with  this  activity  it  would  have  been  compelled 
to  undertake  a  vast  administrative  program  embodying 
both  construction  and  operation.  It  would,  legitimately, 
have  been  subject  to  an  unending  fusillade  of  publicity 
and,  less  legitimately,  to  criticism  for  political  ends.  With 
the  cessation  of  the  war  it  would  have  had  an  operating 
organization   which,   with   respect   to   its   operation   of 


DAMAGED  PAGE(S) 


"requisitioned"  roads,  would  have  been  readily  liquidated, 
as  was  the  actual  Railroad  Administration.  But  in  addi- 
tion it  would  have  had  on  its  hands  the  hundred  thousand 
miles  of  new  lines  for  which,  under  current  business  con- 
ditions, the  existing  and  established  roads  could  find 
neither  capital  nor  immediate  use.  It  would  have  a 
difficult  problem  of  liquidation.  And  in  the  meanwhile  its 
regulatory  functions  would  have  been  lost  sight  of;  the 
inevitable  criticism  of  its  war  operations  would  have 
influenced  public  opinion  unfavorably;  the  surplus  railroad 
capacity  would  affect  the  whole  railroad  situation. 

It  is  in  much  the  same  situation  as  the  hypothetical  case 
above,  that  the  Shipping  Board  finds  itself.  Reduced  to 
the  simplest  terms,  the  temporary  war  structure  must  be 
removed  from  the  foundation  of  shipping  regulation  and 
assistance.  Yet  the  world  trade  conditions  are  bound  to 
make  this  a  slow  process.  Granting  the  desirability  of  an 
adequate  merchant  marine  for  the  years  to  come,  the  new 
Board  must  so  conduct  the  work  delegated  to  it  and  in- 
herited by  it  as  to  win  to  this  merchant  marine  the 
support  of  all  those  elements — farmers,  traders,  tax- 
payers, manufacturers,  legislators — on  whose  cooperation 
depends  its  success. 

What  is  the  work  delegated  to  the  Board;  what  prob- 
lems has  it  inherited  ?  Firsty  continuing  regulatory  powers 
over  shipping  and  efforts  toward  the  permanent  upbuilding 
of  our  merchant  fleet.  Second^  the  liquidation  of  govern- 
ment owned  tonnage.  Thirds  the-^ operation  of  the  govern- 
ment fleet  pending  liquidation. 

It  will  probably  be  a  number  of  years  before  the  skeins 
are  untangled.  That  heritage  of  the  war,  the  fleet  and  its 
operation  and  disposal,  is  seemingly  mixed  inextricably 
with  the  problem  of  the  entire  merchant  marine.  To  try, 
on  the  one  hand,  to  break  off  at  once  from  government 
operation,  regardless  of  consequences,  would  defeat  the 
efforts  of  the  other  hand  to  assist  and  encourage  private 
development.     Probably  no  other  war  problem  is  still 


so  thoroughly  with  us,  unsolved,  as  is  the  shipping  situ- 
ation. There  has  been  no  other  problem  of  liquidation 
kept  so  completely  in  front  of  us  for  commendation  or 
condemnation — nor  one  which  can  be  so  greatly  benefited 
by  restrained  and  sober  consideration  now  of  the  under- 
lying factors  and  possible  methods  of  solution. 

The  basis  of  any  consideration  of  the  Shipping  Board 
actlTT-ify  lies  in  the  legislation  which  set  up  the  Board  and 
which  dircc^Q  the  broader  policies  on  which  its  operation  is 
based.  There  ar^  t-,ro  principal  legislative  acts;  first,  the 
Shipping  Act  of  1916  enctcu-4  six  months  before  our  entry 
into  the  war;  second,  the  American  Merchant  M-irine  Acr, 
1920,  known  as  the  Jones  Bill,  approved  eighteen  months 
after  the  Armistice.  Between  these  two  basic  instruments 
came  a  number  of  minor  enabling  acts,  largely  in  the 
nature  of  definitive  appropriations  covering  the  war-time 
activity  of  the  Board.  For  the  most  part  this  war  activity 
was  conducted  under  delegation  of  authority  granted  to 
the  President.  For  this  reason  and  because  of  its  strictly 
emergency  character,  this  interim  legislation  set  up  no 
standards  bearing  upon  current  or  future  Board  activity, 
and  need  not  be  considered  here. 


DAMAGED  PAGE(S) 


f^mm 


Shipping  Legislation 

THE  Shipping  Act  of  1916  has  been  characterized  as  the 
first  effort  of  this  country  after  nearly  half  a  century  of 
inactivity  to  devise  a  general  and  forward-looking  shipping 
policy.  Edward  N.  Hurley,  in  his  book,  "The  N«^ 
Merchant  Marine,"  credits  the  late  Bernard  N.  TXuh.er  with 
being  the  "father"  of  this  new  legis1^*^'^^>  passed  under 
the  guidance  of  Senator  Fle^-^^cr  of  Florida  and  Repre- 
sentative AlexanHer  ot  Missouri,  later  Secretary  of  Com- 
merce from  December,  1919,  to  March,  1921.  It  is  true 
that  the  progress  of  the  World  War  in  its  affect  on  world 
shipping,  had  an  important  bearing  upon  the  immediate 
need  of  some  enactment  that  would  preserve  the  integrity 
of  the  fleet  under  the  American  flag,  and  provide  for  any 
emergency  that  might  develop.  But  essentially,  and  in  so 
far  as  its  guiding  policies  looked  ahead  toward  a  continu- 
ing development  and  encouragement  of  our  merchant 
marine,  the  1916  Shipping  Act  was  peace-time  legislation. 
This  Act  has  three  somewhat  distinct  phases  relating, 
first,  to  the  construction,  acquisition  and  charter  of  ship 
tonnage  and  the  transfer  of  vessels  to  and  from  the 
American  flag;  second,  to  specific  investigations  into  con- 
ditions bearing  upon  the  merchant  marine;  and  third,  to 
the  regulation  of  rates  and  practices  of  common  carriers  by 
water  in  foreign  and  interstate  commerce.  By  it  a  Shipping 
Board  of  five  members  was  established  for  the  purpose, 
according  to  its  preamble,  "of  encouraging,  developing 
and  creating  a  naval  auxiliary  and  naval  reserve  and  a 
merchant  marine  to  meet  the  requirements  of  the  com- 
merce of  the  United  States  with  its  territories  and  posses- 
sions and  with  foreign  countries." 

Subject  to  greatly  restricted  limitations  the  Board  was 
authorized  to  build,  lease  or  charter  ships;  also  to  form  a 
150,000,000  corporation,  the  life  of  which  was  limited  to 

8 


five  years  from  the  end  of  the  war,  which  could  purchase, 
lease,  charter,  maintain  and  construct  ships  and,  only  if 
unable  to  sell  or  charter,  could  operate  them.  Definite 
restrictions  were  established  on  the  transfer  of  vessels  to 
foreign  registry  during  war  emergency  and  in  normal  times. 
Questions  of  transfer  of  tonnage  engaged  most  of  the  atten- 
tion of  the  Board  before  our  declaration  of  war. 

The  Board  was  directed  by  the  Shipping  Act  to  in- 
vestigate specifically  these  six  subjects: 

Relative  costs  and  conditions  of  construction  and 

operation  here  and  abroad. 
Rules  under  which  ships  could  be  constructed  here 

and  abroad  with  respect  to  classification  and  rating. 
Marine  insurance. 
Navigation  laws. 

Mortgage  loans  to  encourage  investments  in  ships. 
Discrimination  by  foreign  governments. 

Under  this  initial  legislation  and  under  supplementary 
legislative  appropriations  and  presidential  proclamations, 
the  Shipping  Board  continued  to  function  until  the 
Merchant  Marine  Act  of  1920  was  made  effective  through 
the  appointment  of  the  present  Board. 

Bearing  on  the  character  and  content  of  this  new, 
current  shipping  legislation  are  two  features  of  interest. 
First,  there  was  no  obvious  intention  in  the  original 
legislation  to  set  up  a  system  of  government  operation  of 
shipping,  except  in  so  far  as  private  enterprise  could  not  be 
found  to  operate  tonnage  deemed  necessary  to  merchant 
marine  development.  The  extent  of  the  government's 
participation  in  shipping — particularly  in  the  acquisition 
of  a  huge  fleet  of  its  own — could  hardly  have  been  foreseen. 
If,  in  the  liquidation  of  government  operation  of  this  fleet 
during  the  period  since  the  Armistice,  the  old  Board  has 
been  criticised  as  dilatory  and  as  contriving  to  maintain 
government  control,  the  measure  of  the  criticism  is  a 
matter  of  personal  opinion  as  to  the  expediency  and  possi- 
bility  of  immediate   liquidation   irrespective   of  conse- 


quences.  Certain  it  is  that  the  new  legislation,  approved 
over  a  year  ago,  definitely  reaffirms  the  policy  of  private 
ownership  and  operation. 

Second,  the  previous  Boards  carried  out,  to  such  a 
degree  as  was  feasible  in  the  light  of  their  concentration 
upon  immediate  war  problems,  the  investigations  which 
the  original  legislation  had  directed  them  to  make,  and 
were  able  to  contribute  to  the  new  legislation  recom- 
mendations considered  valuable  and  far  reaching  regard- 
ing marine  insurance,  ship  mortgages  and  other  features 
of  this  new  and  comprehensive  Shipping  Act,  and  to  make 
progress  on  the  codifying  of  our  navigation  laws. 

The  Preamble  and  Section  i  of  the  Merchant  Marine 
Act,  1920,  states  the  necessity  for  an  adequate  merchant 
marine  and  outlines  the  policy  of  the  United  States  for  its 
development  and  encouragement  in  these  words: 

An  Act  To  provide  for  the  promotion  and  maintenance  of 
the  American  merchant  marine,  to  repeal  certain  emergency 
legislation,  and  provide  for  the  disposition,  regulation,  and  use 
of  property  acquired  thereunder,  and  for  other  purposes. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled. 
That  it  is  necessary  for  the  national  defense  and  for  the 
proper  growth  of  its  foreign  and  domestic  commerce 
that  the  United  States  shall  have  a  merchant  marine  of 
the  best  equipped  and  most  suitable  types  of  vessels 
sufficient  to  carry  the  greater  portion  of  its  commerce 
and  serve  as  a  naval  or  military  auxiliary  in  time  of  war 
or  national  emergency,  ultimately  to  be  owned  and 
operated  privately  by  citizens  of  the  United  States;  and 
it  is  hereby  declared  to  be  the  policy  of  the  United 
States  to  do  whatever  may  be  necessary  to  develop  and 
encourage  the  maintenance  of  such  a  merchant  marine, 
and,  in  so  far  as  may  not  be  inconsistent  with  the 
express  provisions  of  this  Act,  the  United  States 
Shipping  Board  shall,  in  the  disposition  of  vessels  and 
shipping  property  as  hereinafter  provided,  in  the 
making  of  rules  and  regulations,  and  in  the  admin- 
istration of  the  shipping  laws,  keep  always  in  view  this 
purpose  and  object  as  the  primary  end  to  be  attained. 

10 


There  have  been  laid  down  in  this  legislative  enactment 
known  as  the  Jones  Bill  provisions  and  regulations  which, 
subject  to  such  revisions  as  experience  and  necessity  may 
dictate,  constitute  the  charter  under  which  the  Shipping 
Board  must  proceed.  The  policy  of  private  ownership 
expressed  by  a  negation  of  government  operation  in  the 
1 91 6  Act,  becomes  in  this  act  a  clearly  defined  and  posi- 
tive expression  of  policy.  The  policy  to  be  pursued  in 
the  liquidation  of  the  war  enterprise  is  enunciated.  And 
by  a  number  of  specific  measures,  assistance  to  American 
shipping  and  shipbuilding  is  facilitated. 

The  sponsor  for  this  legislation  was  Senator  Wesley  L. 
Jones  of  Seattle,  Republican  member  of  the  Senate  from 
Washington  since  1909.  "An  adequate  merchant  marine,*' 
Senator  Jones  has  said,  "built  in  American  shipyards  by 
American  labor,  owned  by  American  capital,  operated  and 
managed  by  American  seamen,  carrying  American  com- 
merce to  all  parts  of  the  world,  flying  the  American  flag, 
has  been  my  dream  for  many  years,  and  it  is  my  purpose 
to  do  whatever  I  can  to  attain  this  great  end." 

The  provisions  of  the  Jones  Bill  may  be  divided,  for 
purposes  of  a  brief  summary,  into  four  classifications: 
(i)  Specific  enactments  governing  the  composition  of  the 
Board  and  assistance  to  shipping;  (2)  regulatory  pro- 
visions; (3)  instructions  covering  liquidation  of  govern- 
ment holdings;  and  (4)  investigations  directed  to  be  made. 

(i)  The  Act  repeals  war  emergency  legislation  and  three 
sections  of  the  191 6  Act  and  amends  other  sections  of  it; 
it  sets  up  a  board  of  seven  (instead  of  hv^)  commissioners, 
territorially  and  politically  representative,  with  salaries  of 
Ji 2,000  (previously  ^7,500),  to  direct  and  enforce  its 
provisions  and  to  exercise  powers  previously  granted  to, 
and  delegated  by,  the  President.  The  commissioners  must 
not  acquire  financial  interest  in  a  common  carrier  subject 
to  the  Act,  but,  contrary  to  the  earlier  provision,  a  man 
with  shipping  interests  is  not  debarred  from  appointment, 
but  may  not  take  part  in  discussions  relative  to  them. 


II 


Section  34  is  one  of  the  most  far-reaching  provisions  and, 
incidentally,  subject  to  the  liveliest  discussions  in  its  bearing 
on  the  tariff  and  on  foreign  relationships.  It  directs  the 
President  to  terminate  those  provisions  of  treaties  with 
other  countries  which  restrict  the  right  of  the  United  States 
to  impose  discriminating  customs  duties  favoring  imports 
in  United  States  vessels  and  discriminating  tonnage  dues. 
Neither  President  Wilson  nor,  as  yet,  President  Harding, 
have  complied  with  this  direction  and  further  congressional 
action  is  possible  that  will  define  the  application  and  extent, 
if  any,  of  this  proposed  discrimination. 

A  provision  of  immediate  benefit  to  the  shipping  in- 
dustry and  one  which  has,  to  a  certain  extent,  been  taken 
advantage  of,  relieves  profits  of  ship  operation  from 
federal  war  and  excess  profits  taxes  if  an  amount  equal  to 
these  taxes  is  invested  in  new  ship  construction  in  United 
States  shipyards  up  to  one-third  of  the  cost  of  the  new 
construction;  similarly  it  exempts  from  these  taxes  profits 
from  ship  sales  if  the  entire  profits  are  invested  in  new  ship 
construction.  These  exemptions  apply  for  a  period  of  ten 
years  beginning  with  1921. 

The  Board  may  create  separate  insurance  funds  to 
insure  its  own  interests  in  vessels  or  plants;  and  a  revolving 
construction  loan  fund  out  of  revenues  during  five  years 
not  exceeding  $25,000,000  to  aid  in  the  construction  of  ship 
tonnage  in  private  yards,  up  to  two-thirds  of  the  cost  of 
each  vessel. 

The  Board  is  directed  to  take  over,  maintain  and  de- 
velop dock  and  terminal  properties  acquired  by  the 
President,  these  not  to  be  sold  unless  authorized  by  law. 
The  American  Bureau  of  Shipping  is  officially  recognized 
as  the  Classification  Agency  for  Government-owned  vessels, 
thus  strengthening  the  position  of  this  organization. 

Considered  of  fundamental  importance  in  its  bearing  on 
the  whole  shipping  problem,  inasmuch  as  the  liquidation  of 
government  tonnage  is  dependent  upon  the  investment  of 
private  funds,  is  Section  30  of  the  Merchant  Marine  Act, 

12 


1920,  cited  for  separate  reference  as  the  Ship  Mortgage 
Act,  1920.  This  section,  specifically  and  in  great  detail, 
changes  the  existing  law  of  ship  mortgages  to  allow  the 
granting  of  a  preferred  mortgage  to  take  precedence  over 
all  maritime  liens.  By  thus  improving  the  security 
afforded  for  ship  mortgage,  it  is  expected  that  a  greater 
amount  of  money  will,  other  things  equal,  be  attracted  to 
investment  in  American  shipping. 

(2)  Of  the  regulatory  provisions  of  the  Jones  Bill,  the 
application  of  Section  28  has  been  the  first  to  receive  active 
consideration  at  the  hands  of  the  new  Board  by  reason  of 
its  possible  immediate  benefit  to  American  ship  owners. 
This  section  prohibits  the  application  of  lowered  joint  or 
proportional  rates  by  carriers  subject  to  the  Interstate 
Commerce  Act  in  connection  with  foreign  transportation 
except  in  conjunction  with  vessels  documented  under 
United  States  laws.  The  Interstate  Commerce  Com- 
mission may,  however,  suspend  the  application  of  this 
section  where,  in  the  opinion  of  the  Shipping  Board, 
adequate  facilities  are  not  provided  by  American  vessels. 
This  discrimination  in  favor  of  our  shipping  is  another 
example  of  the  advantages  sought  to  be  gained  for  the 
American  merchant  marine  by  this  shipping  legislation, 
without  a  resort  to  measures  of  direct  subsidy  both 
championed  and  opposed  so  bitterly  in  earlier  congres- 
sional consideration. 

Other  phases  of  regulation  are  outlined.  For  example: 
The  Board  is  directed  to  make  rules  affecting  shipping  in 
foreign  trade,  to  adjust  unfavorable  conditions,  and  to 
cooperate  with  other  Government  Departments  in  this 
respect.  Regulations  of  the  Shipping  Act,  1916,  governing 
deferred  rebates,  "fighting  ships,"  retaliations  and  unfair 
discrimination  are  further  strengthened  by  an  amendment 
regarding  violations  by  aliens  and  the  certification  of  such 
acts  to  the  Secretary  of  Commerce.  Coastwise  shipping 
laws  are  extended  to  Island  possessions  after  February  i, 
1922,  thereby  restricting  trade  between  the  United  States 

13 


(^ 


and  these  possessions  to  American  vessels,  provided 
adequate  American  service  is  established  and  maintained. 
Mails  are  to  be  carried,  so  far  as  practicable,  on  vessels 
American  built  and  documented. 

(3)  The  instructions  governing  the  liquidation  by  the 
Board  of  Government-owned  shipping  authorize  and  direct 
the  sale  of  all  vessels.  Selling  prices  are  to  be  judged  on  the 
basis  of  a  business  disposing  of  property  which  it  is  not 
forced  to  sell.  Completion  of  payment  cannot  be  deferred 
beyond  fifteen  years.  Vessels  considered  unnecessary  to 
the  American  Merchant  Marine  may  be  sold  to  aliens  if  no 
market  for  them  exists  here;  in  this  case  payments  may  be 
deferred  for  ten  years.  The  Emergency  Fleet  Corporation 
is  authorized  to  continue  in  existence  until  all  vessels  are 
sold.  Previous  legislation  limited  its  life  to  five  years  from 
the  cessation  of  the  war. 

Proceeds  from  the  disposal  of  this  property,  except  for 
the  special  funds  authorized,  and  for  operating  capital,  are 
now  directed  to  be  turned  in  to  the  Treasury. 

(4)  The  Shipping  Board  is  directed  specifically  to  in- 
vestigate the  establishment  of  new  or  additional  steamship 
lines  for  the  development  of  foreign  and  coastwise  trade 
and  adequate  postal  service.  It  is  authorized  to  sell  or 
charter  vessels  for  these  lines  or,  if  necessary,  to  operate 
and  maintain  them  until  they  can  be  sold  or  are  found  not 
self-sustaining.  Government  service  paralleling  private 
American  service  shall  not,  however,  charge  lower  rates. 

The  Board  is  also  directed  to  cooperate  with  the  Secre- 
tary of  War  in  promotingipand  developing  ports  and  their 
facilities,  and  to  investigate  terminal  equipment. 


h 


H 


The  Immediate  Problems  of  the  Shipping 

Board 

THIS  summary  of  the  basic  legislation  under  which  the^ 
Shipping  Board  functions  has  for  its  purpose  a  clarify-* 
ing  of  the  relationship  between  the  broad,  continuing  func- 
tions of  the  Board,  and  the  very  important,  immediate* 
problems  of  war  liquidation  and  ship  operation. 

With  these  immediate  problems  the  public  is  more  or 
less  familiar,  certainly  to  the  extent  that  the  glaring  nature- 
of  some  of  them  have  furnished  material  for  columns* 
upon  end  of  newspaper  report  and  comment.  Without- 
deprecating  in  any  way  the  seriousness  of  the  apparent* 
demoralization  of  the  shipping  situation  and  the  seeming . 
hiatus  which  occurred  in  the  formulation  and  execution  of  • 
Shipping  Board  policies  previous  to  the  appointment  of* 
the  present  Board,  it  is  probable  that  a  clearer  under-, 
standing  of  them  is  to  be  gained  by  setting  up  these, 
problems  in  proper  perspective. 

Two  points  have  been  suggested  in  current  editorial 
comment  that  may  be  worth  noting.  The  first  is  that,  in 
the  main,  the  new  Board  is  but  energizing  policies  broadly 
outlined  more  than  a  year  ago  and  on  which  a  certain 
measure  of  progress  had  already  been  made.  In  the  second 
point,  an  allowance  or  discounting  is  made  for  possible 
reasons  behind  the  widely  heralded  characterization  of  the 
shipping  situation  as  the  "greatest  commercial  wreck  in 
the  history  of  the  world." 

Just  as  the  entire  scope  of  the  Shipping  Board  resolves 
itself  into  two  chief  factors — (i)  continuing  peace-time 
regulation  and  assistance,  and  (2)  liquidation  of  the  war 
program — so  may  this  liquidation  be  considered  from  two 
related  but  nevertheless  distinct  angles.  One  is  external 
to  the  Board — the  dislocation  of  world  commerce;  the 

15 


other  internal — the  problems  of  personnel,  management 
and  policies.  For  the  difficulties  and  necessary  delays  to 
liquidation  arising  from  the  tremendous  surplus  of  ship 
capacity  throughout  the  world,  both  an  actual  excess  of 
tonnage  and  an  actual  deficit  in  volume  of  trade  compared 
with  any  scale  that  might  be  called  normal,  there  seems  to 
be  no  remedy  that  any  body  of  men  could  devise.  In  time, 
the  condition  will  adjust  itself;  unprofitable  tonnage,  ships 
that  were  worked  to  death  during  the  war,  will  be  scrapped. 
Fleets  will  be  brought  to  a  better  balance.  International 
movement  of  commodities  will  set  its  own  new  normal. 
In  the  meanwhile  the  United  States  must  accept  the  fact 
that  it  has  on  its  hands  the  greatest  single  fleet  ever  con- 
structed, at  present  at  the  low  ebb  of  its  usefulness;  a  fleet 
which,  irrespective  of  any  reasonable  price  at  which  it  is 
offered,  can  only  slowly  be  liquidated  and  stay  liquidated. 

For  the  internal  problems  of  personnel,  management  and 
policies  there  is  daily  evidence  that  remedies  are  being 
applied.  Not  all  of  them  are  new  wi  th  the  new  Board ;  in  some 
respects,  at  least,  efforts  were  being  made  to  clear  away  part 
of  the  "wreckage"  under  the  direction  of  the  Board  which 
with  but  two  members  carried  over  until  the  present  incum- 
bents were  appointed.  It  is  understandable  that  what 
amounted  to  an  interim  organization  would  hesitate  to  take 
any  broad  action  which  might  conflict  with  the  more  exten- 
sive and  continuing  decisions  of  the  new  and  larger  Board. 

But  the  energizing  effect  of  a  permanent  and  responsible 
body  supported,  as  it  seems  to  be,  by  the  hearty  cooperation 
of  the  President,  gives  assurance  to  shipping  interests  and 
the  public  in  general  that  decisions  will  be  made.  For  of  the 
whole  mass  of  criticism  and  invective  that  has  been  hurled 
at  the  government  for  its  handling  of  the  shipping  situation, 
the  bulk  of  it  simmers  down  to  one  thing — indecision. 

Drawing,  now,  a  line  of  demarcation  between  continuing 
regulations  and  the  problems  of  liquidation,  the  immediate 
considerations  falling  within  this  latter  group  include  the 
following: 

i6 


il 


(i)  Disposal  of  Government-owned  vessels  by  sale 
or  charter,  enabling  the  withdrawal  of  the 
Government  from  ship  operating. 

(2)  Operation  of  fleet  pending  disposal. 

(3)  Disposal  of  other  surplus  property. 

(4)  Reorganization  of  management  and  personnel. 

(5)  Adjustment  of  claims,  litigation,  contracts. 

(6)  Budgeting  and  financing  of  operations  on  the 

basis  of  the  greatest  attainable  economy. 

(7)  Cooperation  with  private  shipping  interests. 

Nor  does  this  include  the  most  important  of  all,  the 
yardstick  by  which  in  the  end  the  accomplishments  of  the 
Board  will  be  measured— the  reestablishing  of  public 
confidence  and  approval. 

Progress  in  the  solution  of  these  problems  is  a  matter  of 
almost  day-to-day  report.  All  indications  seem  to  mark  as 
the  outstanding  accomplishment  so  far,  the  departure  from 
bureaucratic  practice  in  the  revamping  of  the  personnel  of 
the  operating  activities  of  the  Shipping  Board  and  the 
appointment  of  experienced  shipping  men  at  commen- 
surate salaries.  This  reorganization  follows  the  expressed 
belief  of  the  new  Shipping  Board  Chairman  that  "to  get 
the  Shipping  Board  operation  on  an  efficient  basis  is  the 
quickest  and  shortest  step  to  creating  a  situation  whereby 
private  people  can  buy  these  boats  and  get  the  Govern- 
ment out  of  Government  ownership."  What  has  been 
done  along  these  lines  is  best  described  by  sketching  briefly 
the  present  composition  of  the  Board  and  of  the  executive 
organization  subordinate  to  it. 

During  the  better  part  of  three  months  following  his 
inauguration.  President  Harding  had  before  him  the 
pressing  problem  of  the  appointment  of  a  new  Shipping 
Board  to  consist,  under  the  Jones  Bill,  of  seven  members. 
Legislation  now  permitted  the  selection  of  men  having 
shipping  interests  or  affiliations,  and  an  earnest  endeavor 

17 


was  made  to  secure  the  services,  for  the  position  of  Chair- 
man, of  men  of  the  type  of  James  A.  Farrell  of  the  United 
States  Steel  Corporation  and  W.  C.  Teagle  of  the  Standard 
Oil  Company  of  New  Jersey,  men  familiar  with  the 
problems  of  world  commerce  and  shipping  and  of  proven 
executive  ability.  Such  men  had  problems  of  recon- 
struction of  their  own  which  demanded  their  attention; 
furthermore,  the  position  was  considered  in  many  respects 
not  an  enviable  one,  a  position  bound  to  expose  them  to 
criticism,  unjustified  probably,  certainly  severe. 

Forced  to  leave  this  particular  field  of  men  familiar  with 
shipping  problems,  the  President  sought  out  and  obtained, 
as  the  Chairman,  Albert  D.  Lasker,  of  Chicago,  a  man 
whose  successful  experience  in  problems  of  reorganization 
could  be  given  full  play  in  what  is  probably  the  greatest 
problem  of  its  kind  ever  presented  for  solution.  Mr. 
Lasker  was  admittedly  unfamiliar  with  ships  and  shipping, 
but  he  early  gained  the  confidence  of  the  marine  operators 
by  proceeding  to  enlist  for  his  operating  departments 
the  services  of  experienced  ship  operators. 

Following  is  a  list  of  the  members  of  the  United  States 
Shipping  Board,  nominated  on  June  8, 1921,  and  confirmed 
the  following  day.  The  legislation  directs  that  this 
membership  shall  be  representative  of  the  diflferent  sections 
of  the  country  and  that  not  more  than  four  members  shall 
be  of  the  same  political  party. 

Albert  D.  Lasker,  Chairman  (Illinois);  Republican; 
representing  Great  Lakes  district;  term  of  six  years. 
Secretary-Treasurer  and  Director  of  Lord  and  Thomas, 
a  Chicago  advertising  agency,  to  which  he  had  come 
from  newspaper  work  in  Galveston  more  than  twenty 
years  ago;  interested  in  a  number  of  enterprises  which 
he  has  reorganized  and  advertised. 

T.  V.  O'Connor,  Vice-Chairman  (New  York); 
Republican;  representing  Great  Lakes;  term  of  five 
years.  President  of  International  Longshoremen's 
Association  for  twelve  years;  prominent  in  labor  circles; 
appointed  in  192 1  a  member  of  the  New  York  State 
Industrial  Commission. 

18 


f 


I 


George  E.  Chamberlain,  Commissioner  (Oregon); 
Democrat;  representing  Pacific  Coast;  term  of  four 
years.    Former  United  States  Senator  from  Oregon. 

Edward  C.  Plummer,  Commissioner  (Maine);  Re- 
publican; representing  Atlantic  Coast;  term  of  three 
years.  Editor  and  Admiralty  lawyer;  formerly  Secre- 
tary of  the  Atlantic  Carriers  Association,  representing 
the  interests  of  American  sailing  vessel  owners. 

Frederick  I.  Thompson,  Commissioner  (Alabama); 
Democrat;  represendng  Gulf  States;  term  of  two  years. 
Newspaper  publisher;  member  of  Shipping  Board 
from  December,  1920  to  March,  1921. 

William  S.  Benson,  Commissioner  (Georgia) ;  Demo- 
crat; representing  Atlantic  Coast;  term  of  one  year. 
Rear  Admiral  U.  S.  N.  (retired).  Appointed  the  fourth 
Chairman  of  the  Shipping  Board  March  15,  1920,  to 
fill  the  unexpired  term  of  Chairman  Payne.  Chairman 
Benson  and  John  A.  Donald  constituted  the  sole 
membership  of  the  Board  from  June,  1920,  until  the 
appointment  of  the  new  Board.  Standing  almost  alone 
to  keep  the  "wreckage"  together,  Admiral  Benson  has 
been  credited  with  achieving  a  remarkable  record  in 
view  of  the  difficulties  confronting  him. 

Meyer  Lissner,  Commissioner  (California);  Re- 
publican; representing  the  Pacific  Coast;  term  of  one 
year.  Lawyer,  interested  in  public  service  matters; 
Chairman  of  the  first  Board  of  Public  Utilities  in  Los 
Angeles. 

This  is  the  composition  of  the  Board  created  under  the 
Merchant  Marine  Act  of  1920  to  carry  out  the  provisions 
of  that  Act — the  permanent  function  of  regulation  and  the 
immediate  function  of  ship  operation  and  liquidation. 

A  quotation  from  the  testimony  of  Chairman  Lasker 
before  the  subcommittee  of  the  House  Committee  on 
Appropriations  on  July  27,  1921,  shows  the  policy  of  the 
Board,  which  has  been  carried  out,  with  respect  to  a  seg- 
regation of  these  functions  to  permit  efficient  operation: 

"It  (the  Shipping  Board)  has  been  an  authority  over  all  of 
the  boats  .  .  .  and  it  has  had  to  run  a  part  of  the  com- 
peting boats  .  .  .  That  in  itself  would  make  impossible 
the  successful  running  of  the  fleet  by  the  Government. 

19 


.  .  .  The  law  mandates  us  to  do  so  many  detail  things  that 
we  have  not  sufficient  time  for  the  larger  things.  Now  we 
are  putting  the  operation  of  the  boats  under  the  Emer- 
gency Fleet  Corporation.  .  .  .  By  separating  the  opera- 
tion of  the  boats  and  placing  it  in  an  independent  cor- 
poration, when  the  Shipping  Board  meets  it  meets  for  the 
purposes  for  which  it  was  primarily  brought  into  being." 
The  duties  of  the  Shipping  Board  have  now  been  divided 
among  the  Commissioners  who  will  act  as  heads  of  bureaus 
as  outlined  below.  Chairman  Lasker  will  be  a  member 
ex-officio  of  each  bureau  and  will  handle  all  matters  of 
finance. 

Commissioners  Frederick  I.  Thompson  and  Edward 
C.  Plummer  will  head  the  Bureau  of  Traffic.  They  will 
handle  all  traffic  matters  and  will  determine  the  neces- 
sary trade  routes  which  should  be  developed.  They 
will  scrutinize  all  conferences  and  agreements  in  the 
foreign  and  domestic  trades  and  will  investigate  all 
complaints  of  discrimination  in  rates  or  unfair  prices. 

Commissioner  T.  V.  O'Connor  will  have  charge  of 
the  Bureau  of  Operations.  He  will  study  the  relative 
cost  of  operation  of  American  and  foreign  ships,  par- 
ticularly with  regard  to  labor  costs.  His  work  will 
also  cover  industrial  relations  with  regard  to  marine 
and  dock  labor,  and  in  compliance  with  section  8  of 
the  Jones  Bill  he  will  make  studies  of  port,  pier  and 
terminal  facilities. 

The  Bureau  of  Construction  will  be  under  Commis- 
sioner William  S.  Benson.  His  duties  will  be  to  study 
the  relative  cost  of  shipbuilding  at  home  and  abroad, 
particularly  the  cost  of  building  the  most  efficient 
types.  He  will  pass  upon  transfers  of  American  vessels 
to  foreign  ownership  or  registry,  and  will  administer 
the  construction  loan  fund  which  has  been  authorized. 

Commissioner  George  E.  Chamberlain  will  have 
charge  of  the  Bureau  of  Law.  He  will  scrutinize  inter- 
national, foreign  and  domestic  shipping  laws  affecting 
shipping  and  will  advise  the  Board  of  any  instances 
wherein  the  laws  are  unjustly  discriminatory;  he  will 
conduct  such  hearings  as  the  Board  may  hold  and 
have  general  supervision  of  all  litigation. 

20 


Commissioner  Lissner  will  head  the  Bureau  of  Re- 
search. He  will  conduct  studies  and  gather  data  per- 
taining to  various  activities  in  which  the  United  States 
Shipping  Board  would  be  affected  or  interested,  and 
will  have  supervision  over  the  division  of  field  infor- 
mation. In  addition  his  work  will  include  the  super- 
vision of  marine  insurance  matters  for  the  Board  and 
the  investigation  of  this  entire  subject. 

Section  35  of  the  Jones  Bill  provides  that  power  and 
authority  vested  in  the  Board,  except  as  otherwise  specifi- 
cally provided,  may  be  exercised  directly  by  the  Board  or  by 
it  through  the  United  States  Shipping  Board  Emergency 
Fleet  Corporation.  Under  this  authority,  and  with  the 
approval  of  President  Harding,  the  Shipping  Board 
announced  a  complete  separation  of  the  Fleet  Corporation 
from  the  Board  effective  October  i,  1921.  This  separation 
was  made  complete  by  the  resignation  of  the  members  of 
the  Board  as  trustees  and  officers  of  the  Corporation  and 
the  election  of  Joseph  W.  Powell,  J.  B.  Smull,  W.  J.  Love, 
A.  J.  Frey,  Henry  S.  Kimball,  Elmer  Schlesinger  and  E.  P. 
Farley  as  the  new  trustees.  Mr.  Powell  was  chosen 
President  and  General  Manager. 

The  operation  of  the  properties  of  the  Board,  and  the 
liquidation  of  the  physical  assets  other  than  ships,  have 
been  turned  over  to  the  Fleet  Corporation,  the  Shipping 
Board  retaining  to  itself  the  power  to  veto  cancelling  of 
established  lines  and  the  allocation  of  passenger  vessels. 

In  matters  of  physical  operation,  therefore,  those  having 
business  with  the  Emergency  Fleet  Corporation  will  have 
to  deal  through  the  new  board  of  trustees  and  the  Cor- 
poration officers,  that  is,  with  men  thoroughly  familiar 
with  shipping  practice  and  problems  and  possessed  of  the 
necessary  authority  to  make  prompt  and  unhampered 
decisions.  The  Shipping  Board  itself  will  thus  be  able  to 
concentrate  on  the  subject  of  gradual  disposal  of  the  fleet, 
and  on  the  matters  of  jurisdiction  over  the  activities  of  the 
entire  American  merchant  marine. 

21 


Emergency  Fleet  Corporation 

WITH  the  official  segregation  of  the  ship  operating 
management  from  the  other  functions  of  the  Board, 
it  should  now  be  possible  for  the  public  to  gain  a  clearer  con- 
ception of  the  work  of  each  of  these  two  bodies — the  Fleet 
Corporation  and  the  Board  itself^and  a  better  under- 
standing of  progress  gained  and  difficulties  encountered. 
Irrespective  of  world  trade  conditions,  of  the  financial 
embarrassment  of  many  ship  operators,  and  of  the  present 
vast  surplus  of  tonnage,  the  success  of  fleet  operations 
depends  immeasurably  upon  the  personal  equation  of 
those  entrusted  with  their  direction.  It  is  significant, 
therefore,  that  the  appointment  of  the  new  Fleet  officials 
has  met  with  an  approval  which  promises  that  sympathetic 
cooperation  so  necessary  to  an  untangling  of  the  existing 
situation.  Any  disappointment  that  may  have  been  felt 
over  the  lack  of  experienced  shipping  men  on  the  Board 
itself,  was  dissipated  by  the  selection  for  the  Fleet  of  men 
of  the  widest  and  most  valuable  accomplishment  in  marine 
affairs.  Further,  the  indications  are  that  they  will  con- 
tinue to  be  given  free  rein  and  the  responsibility  resulting 
therefrom. 

Heading  the  personnel  of  the  Fleet  Corporation  are  the 
seven  men  who,  as  trustees,  are  also  its  chief  executive 
officers.  Of  these,  Messrs.  SmuU,  Love  and  Frey, 
originally  appointed  as  vice-presidents,  have  been  desig- 
nated by  Chairman  Lasker  as  the  "key  men"  of  ship 
operation.  Their  previous  experience  and  standing  is 
outlined  briefly  as  follows: 

Joseph  W.  Powell,  President  and  General  Manager 
of  the  Emergency  Fleet  Corporation,  serving  the 
Government  without  salary,  was  formerly  Vice-Presi- 
dent of  the  Bethlehem  Shipbuilding  Corporation,  Ltd. 
He  is  devoting  his  attention  to  financing,  accounting 
and  sales  and  to  the  general  problems  of  organization. 

22 


J.  Barstow  Smull,  Vice-President,  at  a  salary  of 
^35,000,  came  to  the  Corporation  from  the  Vice-Presi- 
dency of  J.  H.  Winchester  &  Company,  Inc.,  mentioned 
as  one  of  the  largest,  if  not  the  largest  of  American 
ship  brokerage  companies.  Mr.  Smull  was  born  in 
New  York  in  1874  and  entered  the  shipping  business  in 
1894,  joining  his  present  firm  in  1907.  He  has  been 
Vice-President  of  the  New  York  Produce  Exchange. 
With  a  wide  experience  in  all  branches  of  shipping,  he 
is  recognized  by  shipping  interests  as  a  foremost  expert 
in  ship  operation. 

William  J.  Love,  born  in  Baltimore  in  1873,  was,  at 
the  time  of  his  appointment.  Assistant  Manager  in  the 
United  States  for  Furness,  Withy  &  Company,  Ltd., 
one  of  the  largest  shipping  firms  of  Great  Britain.  He 
had  previously  been  associated  with  the  Atlantic 
Transport  Company  and  later  was  manager  of  the 
American  flag  steamers  of  the  International  Mercantile 
Marine  Company.  He  is  especially  familiar  with 
competitive  trade  conditions  throughout  the  world  and 
likewise  has  a  wide  acquaintanceship  with  merchants 
and  exporters.  As  a  Vice-President  of  the  Fleet  Cor- 
poration, Mr.  Love  receives  ^35,000  a  year. 

Mr.  Smull  and  Mr.  Love  were  two  of  the  three  men 
who  were  members  of  the  charter  committee  of  the 
United  States  Government  during  the  war,  having  full 
charge  of  all  the  allocations  of  boats  used  for  merchant 
marine  purposes  under  the  American  flag — a  depart- 
ment which,  according  to  comment,  challenged  the 
interest  and  admiration  of  the  shipping  world.  During 
the  war  period  that  committee  passed  on  upwards  of 
20,000  charter  parties. 

A.  J.  Frey,  a  practical  ship  operator  of  twenty 
years'  experience,  is  the  third  of  the  original  three 
"key"  men  selected  by  Chairman  Lasker,  receiving 
$25,000  as  Vice-President.  For  sixteen  years  previous 
to  191 8  he  was  associated  with  the  Pacific  Mail  Steam- 
ship Company.  During  the  war  Mr.  Frey  was  a  member 
of  the  Pacific  Coast  organization  of  the  Shipping  Board 
and  in  charge  of  the  Ship  Construction  Division  of  the 
Southern  Pacific  Division.  More  recently  he  was  Gen- 
eral Manager  of  the  Los  Angeles  Steamship  Company. 

As  financial  officer  of  the  Fleet  Corporation  Mr. 
Henry  S.  Kimball,  of  New  York  City,  will  have  direct 

23 


i 


«  .    i^ 


I 


supervision  of  the  treasurer's,  comptroller's  and  audi- 
tor's office  and  of  all  collections  of  the  Shipping  Board 
establishment.  Mr.  Kimball's  associations  have  been 
with  the  Boston  Edison  Company,  American  Zinc  Lead 
and  Smelting  Company,  Aetna  Explosives  Company, 
Remington  Arrns,  Union  Metallic  Cartridge  Company 
and  Gaston,  Williams  and  Wigmore. 

ElmerSchlesinger,  General  Counsel  for  the  Board,  and 
E.  P.  Farley,  Sales  Manager,  complete  the  list  of  the 
seven  trustees  of  the  Emergency  Fleet  Corporation. 
The  Treasurer  is  T.  S.  Clear. 

As  the  duties  of  these  executives,  and  of  the  new  district 
managers,  have  become  delineated,  progress  in  the  entire 
organization  of  the  vast  personnel  of  this  enterprise  has 
gone  forward,  with  the  assignment  of  other  able  executives 
to  the  staff  and  with  a  gradual  and  effective  systematizing 
of  inter-relationship  and  functions. 

The  extent  to  which  this  organization,  engaged  in  the 
executive  and  clerical  direction  of  the  government  ships 
and  shipping  properties,  had  developed  and  had  been 
maintained  up  to  the  beginning  of  the  present  Board 
administration,  is  shown  by  a  statement  of  the  number  of 
employees  in  the  Shipping  Board  and  its  subsidiary 
company.  As  of  July  15,  1921,  this  organization  in  the 
United  States  numbered  7,603  employees  whose  annual 
salaries  aggregated  $14,716,662.  In  the  foreign  offices 
there  were  677  as  of  June  30,  representing  a  total  yearly 
payroll,  expressed  in  dollars,  of  approximately  $1,200,000. 

The  readjustment  necessary  to  a  material  reduction  in 
the  numbers  of  these  employees  was  one  of  the  first  matters 
undertaken  by  the  new  regime.  In  particular,  the  com- 
position of  the  foreign  offices,  notably  that  in  London, 
had  come  in  for  considerable  criticism  in  the  percentage  of 
non-Americans  on  these  staffs — comments  characterized 
as  largely  in  the  nature  of  "flag-waving."  Whether  or  not 
they  carried  weight  is  immaterial;  at  any  event  it  was  con- 
sidered that  there  would  be  less  duplication  of  effort  if 
most  of  the  work  of  these  foreign  offices  were  consolidated 

24 


^  If 


with  the  offices  in  this  country,  and  this  is  being  put  into 
effect.  The  reduction  in  staff  here  and  abroad  has  totaled 
about  4,000  members,  cutting  the  organization  to  less  than 
half  of  what  it  was  at  the  middle  of  the  year,  and  repre- 
senting a  saving  of  possibly  $7,500,000  yearly. 

Nearly  every  consideration  of  the  situation  confronting 
the  Shipping  Board  since  the  Armistice  has  begun  with  a 
statement  of  the  three-and-a-half  billion  dollar  expenditure 
for  a  fleet  of  thirteen  and  a  half  million  deadweight  tons. 
Usually,  also,  condemning  reference  is  made  to  the  six 
hundred  wooden  ships,  representing  a  million  nine  hundred 
thousand  tons  of  this  total. 

That  an  analysis  of  the  quantity  and  make-up  of  the 
government-owned  fleet  has,  in  this  case,  been  withheld 
until  a  background  of  Shipping  Board  legislation,  activity 
and  personnel  has  been  broadly  sketched,  does  not  imply 
any  lack  of  appreciation  of  the  fact  that  in  this  volume  of 
tonnage  lies  the  whole  problem  of  physical  operation  and  of 
liquidation  of  capital  assets  and  war  organization.  The 
fact  remains  that  the  ships  are  in  existence;  that  they 
represent  but  about  two-thirds  of  the  entire  ship  program 
of  the  war  in  progress  or  definitely  planned  at  the  time 
hostilities  ceased;  and  that  this  program  and  its  costs  can 
be  compared  only  with  the  value  of  the  successful  outcome 
of  the  war,  as  in  the  case  of  any  other  war  activity. 

Summary  of  Total  E.  F.  C.  Ship  Construction 

Ci  Anc  Number    Deadweight 

OF  Ships         1  onnage 

Requisitioned  Steel 384  2,687,266 

Contract  Steel 1*309  8,927,695* 

Contract  Wood 589  1,885,250 

Contract  Composite  and  Con- 
crete      30  136,500 

Total 2,312        13,636,711 

*Includes  19  vessels  of  217,700  tons  to  be  delivered, 
with  one  exception,  during  1921. 

25 


The  wooden,  composite  and  concrete  vessels  may  be 
considered  as  having  but  a  purely  nominal  salvage  value 
and  may  be  eliminated  from  further  consideration. 

An  analysis  of  the  types  of  the  steel  vessels,  both 
requisitioned  on  the  ways  and  built  under  contract,  shows 
the  following  totals: 

Analysis  of  E.  F.  C.  Steel  Ship  Construction 

Steel  Vessels  Number       Deadweight 

Type  of  Ships  Tonnage 

Cargo 1,420  9,509,234 

Tanker 13B  1,363,030 

Passenger  and  Cargo    ...  25  308,972 

Transport 22  179,775 

Refrigerator 19  161,400 

Collier 9  7o,3SO 

Barges o  22,200 

Tugs 54  W 

Total 1,693  (2)       11,614,961  (2) 

(i)  No  tonnage  given  for  tugs. 

(2)  These  figures  include  the  384  vessels  of  2,687,266 
deadweight  tons  requisitioned  on  the  ways,  of  which 
78  of  728,817  tons  has  been  reconveyed  to  former 
owners  by  June  30,  1921,  and  are  included  in  the 
figures  of  sales  given  below. 

In  addition  to  this  new  construction,  the  seized  German 
vessels,  aggregating  over  600,000  tons,  brought  to  the 
American  fleet  a  number  of  large  passenger  ships,  many  of 
which  have  already  been  reconditioned  and  placed  in  ser- 
vice in  the  development  of  new  trade  routes. 

The  problem  now  exists  of  utilizing  this  fleet  to  best 
advantage  in  the  upbuilding  of  a  permanent  marine,  trans- 
ferring it  to  private  ownership  as  rapidly  as  conditions 
permit,  and  writing  oflF  its  excess  cost  as  a  legitimate  war 
expenditure.  As  of  June  30, 1921,  a  total  of  402  vessels — 
steel,  wooden,  requisitioned  and  seized — of  1,900,121  tons 
had  been  sold  or  reconveyed,  on  the  basis  of  a  sales  value  of 
^260,000,000,  of  which  1131,000,000  had  actually  been  paid. 

26 


' 


Whether  these  ships  will  in  all  cases  "stay  sold"  de- 
pends, it  would  appear,  upon  the  action  of  the  Board  in 
respect  to  the  mortgages  or  notes  which  it  holds  covering 
the  unpaid  balance.  The  plight  of  the  "pioneer  pur- 
chasers" of  Shipping  Board  tonnage  has  aroused  con- 
siderable discussion  in  Congress  and  in  the  press.  Briefly 
stated,  the  situation  is  that  this  tonnage  was  for  the  most 
part  purchased  during  the  period  of  shipping  prosperity 
that  followed  the  Armistice.  On  the  basis  of  indicated 
earning  capacity,  prices  of  about  $200  a  ton  were  agreed 
upon.  With  the  subsequent  collapse  of  trade  and  shipping 
activity,  the  purchasers  of  this  tonnage  find  themselves,  in 
many  cases,  unable  to  continue  the  deferred  payments 
then  arranged  for,  and  it  is  contended  that  some  of  them 
are  facing  bankruptcy.  Foreclosure  by  the  Board  would 
not  advance  the  progress  of  fleet  liquidation;  on  the  other 
hand  it  appears  that  the  Board  cannot,  unless  specifically 
authorized  by  Congress,  remit  or  cancel  any  part  of  the 
original  purchase  price. 

Feeling  that  any  arbitrary  or  "upshot"  price  could  not 
now  be  applied  generally — and  probably  realizing  also 
that  in  the  present  state  of  the  market  it  would  be  next  to 
impossible  to  arrive  at  any  equitable  sale  value — the 
Board  is  conducting  a  detailed  survey  of  every  ship  to  de- 
termine its  condition  and,  at  least,  relatively,  its  value. 
It  is  pointed  out  with  reference  to  the  Government  fleet 
of  steel  vessels,  that  they  are  very  largely  oil-burning — an 
important  consideration  in  economy  of  operation — and 
generally  eflicient  in  character  of  design  and  construction, 
though  in  many  cases  somewhat  over-engined.  This  does 
not,  however,  overbalance  the  fact  that  their  aggregate 
volume  obviously  must  hang  over  the  market  as  an  un- 
stabilizing  influence  for  some  years,  at  least  in  so  far  as 
vessels  of  the  general  cargo  type  are  concerned. 

It  is  contended  by  some  that  during  the  "boom"  the 
Board  should  have  set  a  sale  price  of  1 150  or  less  a  ton, 
instead  of  ^200,  and  thus  have  encouraged  the  purchase  of 

27 


greater  numbers  of  ships.  But  in  answer  to  this,  others 
feel  that  had  this  been  done,  the  number  of  threatened 
failures  by  now  would  have  been  even  greater,  and  that 
no  one  but  the  Government  itself  could  have  carried  any- 
real  volume  of  this  new  tonnage  during  this  world-wide 
curtailment  of  the  international  movement  of  commodities. 
Its  direct  reaction  came  upon  world  shipping,  reflected  in 
operating  deficits  and  in  the  withdrawal  of  ship  tonnage, 
which  the  Shipping  Board  has  faced  in  common  with 
operators  the  world  over. 

A  measurable  improvement  in  trade  conditions  particu- 
larly, as  far  as  this  country  is  concerned,  in  imports,  would 
seem  to  be  indicated.  But  irrespective  of  this,  irrespective 
of  the  amount  written  off  of  the  cost  of  the  fleet  as  war 
expense,  it  will  take  time  for  private  enterprise  to  absorb 
this  immense  volume  of  tonnage. 

The  figures  of  world  shipping  tonnage  issued  by  Lloyds 
as  of  June  30,  1921,  are  interesting  in  this  connection. 
Taking  the  steel  ocean-going  steamships  of  the  principal 
maritime  countries,  there  has  been  an  increase  from 
42,514,000  gross  tons  in  19 14  to  54,217,000  tons  this  year. 
If  world  trade  demand  and  the  parallel  growth  of  ship 
tonnage  had  continued  at  its  previous  rate  of  increase,  the 
present  figure  would  have  been  about  normal.  But  with 
world  commerce  subjected  to  the  violent  upheaval  which 
has  occurred,  there  is  now  a  disparity  about  equivalent 
to  the  amount  of  the  increased  ship  capacity.  And  with 
ships,  as  with  other  commodities  fluid  in  their  movement 
between  sources  of  supply  and  demand,  a  small  surplus, 
say  3  per  cent,  is  enough  to  cause  a  break  in  the  market. 

Two  points  are,  however,  frequently  overlooked  in  con- 
sidering these  figures  of  world  tonnage.  In  the  first  place, 
approximately  one  quarter  of  this  increase  consists  of  oil 
tank  ships.  In  1914  vessels  of  this  type  numbered  385  with 
a  gross  tonnage  of  1,479,000;  for  1921  the  corresponding 
figures  are  861  of  4,419,000  tons.  About  a  half  of  this 
tanker  tonnage  is  American.    Second,  the  present  figures 

28 


I        -» 


1 


include  a  great  number  of  vessels  variously  estimated  by 
shipping  authorities  at  from  3,000,000  to  5,000,000  tons 
which  must  be  scrapped  in  the  course  of  the  next  few  years. 
Ship  tonnage  '^^  existence  during  the  war  was  driven  hard, 
there  was  opportunity  only  for  the  most  perfunctory 
maintenance  and  replacement,  and  some  of  it  has  become 
obsolete,  with  the  result  that  a  considerable  part  of  this 
tonnage  cannot  continue  to  survive  in  competition  with  the 
newer  and  more  efficient  ships.  In  so  far,  therefore,  as  the 
future  is  concerned,  there  should  not  be  any  dangerous 
excess  of  tonnage  under  a  return  to  a  normal,  even  though 
a  new  normal,  of  world  trade. 

Another  feature  that  has  an  important  bearing  upon 
relative  economy  of  operation  is  the  increased  use  of  oil 
fuel — accounting  in  part  for  the  greater  number  of  tankers. 
In  1914  there  were  364  oil-burning  vessels  of  1,310,000 
gross  tons.  This  fleet  has  now  increased  to  2,536  of 
12,797,000  tons,  of  which  about  8,000,000  tons  are  under 
the  American  flag,  or  roughly  two-thirds  of  the  total 
American  fleet  of  13,335,000  gross  tons. 

On  January  i,  1921,  the  steel  vessels  of  the  Shipping 
Board  fleet  numbered  1,331,  according  to  a  statement  by 
Chairman  Lasker,  of  which  1,142  were  in  operation. 
On  July  23,  1921  there  were  1,445  vessels  in  this  fleet  of 
which  only  632  were  being  operated,  66  were  under  repair 
and  747  were  tied  up.  This  decrease  is  indicated  in  terms 
of  tonnage  by  an  official  tabulation  showing  steel  ships  in 
service  by  months  for  the  year  ending  June,  1921.  During 
the  last  six  months  of  1920  the  figures  vary  between 
7,600,000  and  8,250,000  deadweight  tons,  averaging  1,161 
vessels  and  8,000,000  tons.  With  1921,  this  tonnage  began 
to  be  withdrawn  from  service,  as  was  a  part  of  the  tonnage 
of  private  fleets,  until  in  June,  1921,  the  Shipping  Board 
Fleet  in  service  numbered  only  691  of  5,259,000  tons.  By 
November,  1921,  the  number  of  these  vessels  in  service 
had  been  reduced  to  about  400  of  approximately  3,000,000 
deadweight  tons,  a  decrease  for  the  year  of  over  60  per  cent. 

29 


'^^ 


I 


In  the  face  of  the  slackened  demand  for  ships  indicated 
by  these  figures,  it  can  be  appreciated  that  the  problem  of 
the  profitable  operation  of  this  huge  fleet  is  itself  a  difficult 
one,  let  alone  the  question  of  its  liquidation.^ 

The  conflicting  factors  in  the  ship  operating  situunon 
are  these,  that  from  the  viewpoint  of  immediate  national 
economy,  the  fleet  must  be  run  at  the  least  possible  loss 
from  current  operations— for  the  time  being  a  profit  can 
hardly  be  anticipated;  and  at  the  same  time  the  conditions 
imposed  must  be  such  as  to  assist  in  the  upbuilding  of  a 
capable  group  of  private  operators  who  can  be  encouraged 
and   enabled   gradually   to   absorb    this   fleet   from    the 
Government  in  accordance  with  the  policy  of  government 
withdrawal  from  ship  operation  and  ownership.     Withal, 
the  needs  of  the  American  exporters  and  importers  must  be 
considered  in  the  development  of  adequate  shipping  ser- 
vice to  all  parts  of  the  world. 

While  awaiting  a  sale  market  for  these  ships  there  are 
three  methods  under  which  tonnage  can  be  chartered,  that 
in  greater  or  less  degree  relieve  the  Government  of  the 
details  and  the  financial  burden  of  direct  operations. 

The  first  of  these  is  the  time  charter  or  bare  boat  basis, 
under  which  the  Government  would  be  released  from  all 
operating  costs,  the  charterer  paying  so  much  per  ton  per 
month  for  the  hire  of  the  vessel  and  assuming  all  operating 
expenses.  This  is  considered  in  many  ways  the  most 
satisfactory  method,  but  under  the  present  conditions 
almost  as  difficult  to  arrange  as  are  sales.  While  it  the 
time  charter  rates  are  set  low  enough  to  attract  charterers 
now,  there  would  not  be  the  incentive  to  purchase. 

Under  the  second  method,  and  the  one  toward  which 
the  greatest  efforts  are  being  made  to  develop  a  satis- 
factory plan,  the  ship  operating  company  and  the  Fleet 
Corporation  would  work  on  a  partnership  basis,  hach 
would  have  something  at  stake,  the  charterer  standing  his 
share  of  any  losses  and  participating  proportionately  in 
any  profits. 

30 


,1 

i 


To  the  extent  that  the  Government  is  unable  to  charter 
its  vessels  under  either  the  time  charter  or  the  partnership 
plan,  it  must  have  recourse  to  the  system  of  allocation  or 
agency  agreement  for  any  other  ships  which  it  desires  to 
operate  in  conjunction  with  private  companies.    Under 
allocation,  the  Emergency  Fleet  Corporation  pays  all  of 
the  expenses  of  operation  and  the  operator  receives  a  fixed 
percentage  of  the  gross  receipts,  usually  from  2^  per  cent 
to  5  per  cent  depending  upon  the  nature  of  the  commodity 
movement.     This  is  the  basis  of  the  agreement  widely 
known  as  the  MC)-4  contract — that  is,  the  fourth  plan 
that  was  drawn  up  with  the  managing  operators.    In  the 
hearings  before  the  House  Committee  already  referred  to. 
Chairman  Lasker  said:  "May  be  if  I  had  been  on  the  Board 
at  that  time  (when  this  system  was  inaugurated)  or  if  any 
of  you  gentlemen  had  been  on  the  Board    .    .    .    you 
would  have  voted  for  that  contract  in  the  light  of  things  as 
they  were  then.    .    .    .    Without  comment,  because  I  am 
not  expert  enough  on  whether    ...    it  should  have  been 
voted  for  or  not,  it  has  turned  out  to  have  been  as  vicious 
and  incompetent  a  basis  of  doing  business  as  the  human 
mind  could  devise    .    .    ."    It  is  contended  that  under 
allocation,  the  operator  has  no  incentive  to  economize  on 
expenses  or  to  take  any  pride  in  the  boats  themselves; 
rather,  that  the  incentive  is  to  incur  expenses  dispropor- 
tionate to  the  revenue  from  added  business  for  the  sake  of 
the  assured  percentage  on  this  business.    And  further  that 
in  addition  to  being  the  worst  contract  for  the  Govern- 
ment, it  is  by  no  means  the  most  favorable  to  the  operator 
in  that  it  constitutes  an  unstable  condition,  unfavorable  to 
the  proper  development  of  the  merchant  marine.    Never- 
theless, with  respect  particularly  to  passenger  liners  en- 
gaged in  developing  new  routes  for  American  ships,  there 
has  appeared  to  be  no  other  method  that  will  keep  these 
vessels  in  operation  under  present  conditions. 

Congressional   appropriation   committees   have   never 
failed  since   the  inception   of  the    Shipping    Board   to 

31 


iWMM 


"■  ■■^1-Hv.  iv*>iid^.'»"r? 


exercise  their  full  prerogative  in  the  matter  of  investigation 
and  cross-examination  of  the  affairs  of  the  Board,  and  it  is 
probable  that  the  operation  of  no  other  department  has 
been  so  completely  yet  so  unsympathetically  scrutinized. 
On  July  27,  1 92 1,  there  came  up  for  consideration  under 
the  Urgent  Deficiency  Appropriation  Bill,  1922,  the 
request  for  an  added  appropriation  of  $100,000,000  for 
the  six  months  ending  December,  1921,  accompanied  by 
the  recommendation  that  all  receipts  from  liquidation  of 
capital  assets  during  the  year  be  carried  into  the  Treasury 
and  that  direct  appropriations  be  made  for  the  expense  of 
the  Board.  Testimony  taken  at  that  time  disclosed  a  con- 
fusion in  the  accounting  practices  of  the  Shipping  Board 
that  not  only  made  difficult  a  clear-cut  segregation  and 
analysis  of  previous  operating  experience  but,  together 
with  the  general  uncertainty  of  ship  operations,  caused 
Mr.  Lasker  to  disclaim  repeatedly  responsibility  for  the 
accuracy  of  any  budgeting  of  the  requirements  for  the 
coming  year.    This  budgeting  was,  however,  as  follows: 

Estimated  Cash  Requirements  for  the  Fiscal  Year 

Ending  June  30,  1922 

Current  Operations: 
Losses  due  to  operation 

of  ships $100,000,000 

Reconditioning  of  vessels     1 6,000,000 
Insurance      claims      and 

losses  on  ships  ....     10,800,000 
Administration  overhead     15,000,000 

Total  estimated  cash  requirements  on 

current  operations $141,800,000 

Construction  expenditures    $30,610,000 

Less  appropriation  ap- 
proved June  16,  1 92 1     .       25,000,000 

Net  requirement  for  construction    .    .    .         5,610,000 

Total $147,410,000 

3^ 


In  addition  to  the  above,  the  estimated  cash  require- 
ments for  claims  total  158,291,500,  comprising  largely 
cancellation  claims  on  ship  construction.  The  sum  of 
these  two  items,  ^205,700,000,  was  the  basis  of  the  request 
for  half  the  amount,  or  roughly  J  100,000,000  for  the  half 
year  in  addition  to  the  $25,000,000  already  appropriated. 

A  note  is  appended  to  this  estimate  explaining  that  the 
sundry  civil  bill  approved  March  4,  1921,  allows  the  Board 
to  retain  up  to  $55,000,000  derived  from  the  sale  of  capital 
assets  to  be  applied  to  operating  and  construction  expenses 
during  the  year  ending  June  30,  1922;  but  stating  that  no 
deduction  of  this  amount  is  made  in  the  estimate  because 
of  the  announced  intention  of  the  Board  to  ask  for  repeal 
of  this  authority  and  the  provision  of  all  necessary  funds  by 
direct  appropriation. 

The  appropriation  finally  granted,  in  addition  to  the 
earlier  $25,000,000,  amounted  to  $48,500,000  and  it  was 
generally  expected  that  the  Board  would  later  in  the 
current  session  request  additional  funds.  However,  on 
September  27th  it  was  announced  that  the  Board  had 
informed  Congress  that  it  does  not  expect  to  ask  for  any 
new  appropriations  because  of  reductions  that  are  being 
made  in  the  operating  deficit. 

Just  what  provision  this  will  make  for  the  payment  of 
claims  is  not  clear.  Mr.  Schlesinger,  General  Counsel, 
estimated  that  their  face  value  was  about  $300,000,000  to 
$350,000,000  involving  some  3,500  separate  cases.  The 
work  of  handling  these  claims  has  necessitated  the 
formation  of  a  larger  and  reorganized  legal  staflF,  and  no 
approximation  has  yet  been  reached  of  the  aggregate 
amount  of  the  settlements  that  will  finally  be  made. 

To  pass  on  these  claims,  a  Claims  Commission  has  been 
appointed  by  the  Shipping  Board,  but  separate  from  it, 
consisting  of  five  men:  Judge  Walter  D.  Meals,  of  Cleve- 
land, Chairman;  and  Homer  Ferguson,  President  of  the 
Newport  News  Dry  dock  and  Shipbuilding  Company; 
T.  W.  Wood,  formerly  President  Maryland  Steel  Com- 


33 


I 


pany;  Commander  Richard  M.  Watt,  formerly  Chief 
Construction  Officer  of  the  Navy,  and  Arthur  W.  Teele, 
Vice-President  of  the  Public  Accountant  Association  of 
the  United  States.  The  Board  and  the  claimant  will  both 
appear  before  this  Commission  by  counsel  and  the  Board 
will  not  therefore  be  in  the  position  of  being  both  arbitrator 
and  defendant. 

On  the  other  hand,  the  Board  had,  it  was  estimated  as  of 
June  30,  1 92 1,  about  $500,000,000  of  so-called  quick  assets 
of  which  $287,000,000  are  in  the  shape  of  notes  and 
accounts  receivable,  about  half  from  vessel  purchasers. 
These  together  with  the  capital  assets  of  the  Board  are  now 
being  subjected  to  careful  inventory  and  review,  prior  to 
efforts  toward  collection  and  liquidation.  Incidentally,  no 
assets  may  now  be  disposed  of  without  the  permission  of 
the  Government  Budget  Officer. 

In  connection  with  the  subject  of  appropriations,  the 
following  figures  are  extracted  from  a  "statement  of 
moneys  authorized,  appropriated  for,  and  otherwise 
provided  for  from  the  inception  of  the  Board  to  June 
30,  1921." 

Appropriated  for: 

United  States  Shipping  Board  (per- 
manent fund,  salaries,  expenses)  .        $52,683,753 

U.  S.  S.  B.  Emergency  Fleet  Cor- 
poration    (Emergency    Shipping 

fund) 3,240,053,000 

Otherwise  provided  for 29,512,426 

Total  appropriated  or  provided    .    .   $3,322,249,179 

(This  does  not  include  $20,459,000  that  was  not 
available  until  July  i,  1921.) 

This  review  of  the  functions  and  the  problems  of  the 
United  States  Shipping  Board  and  its  subsidiary  Corpora- 
tion has  not  attempted  to  go  into  the  many  related 
questions  bearing  upon  the  general  status  of  ship  operating 

34 


L 


m 


under  the  American  flag — such,  for  example  as  the  much- 
discussed  relative  cost  of  operation;  the  Edmonds*  Bill 
amending  the  LaFollette  Seamen's  Law  in  the  matter  of 
crews  on  oil-burning  vessels,  and  other  labor  problems; 
development  of  efficient  marine  organizations  here  and 
abroad;  revision  of  tonnage  measurements;  oil  supply; 
and  any  detailed  discussion  of  preferential  treatment  for 
American  ships.  Nor  has  the  economic  necessity  and 
value  of  an  adequate  American  merchant  fleet  been  argued. 

Here  the  assumptions  are  made,  justified  by  the  weight 
of  experienced  opinion,  that  a  merchant  marine  capable  of 
carrying  fully  half  of  our  international  trade  in  com- 
petition with  the  fleets  of  other  countries,  is  a  national 
requirement  and  an  asset  of  tremendous  tangible  and  in- 
tangible value.  And  that,  weighing  the  advantages  and 
disadvantages,  there  are  no  insuperable  obstacles  to  the 
success  of  our  fleet  in  world  competition. 

For,  rising  and  falling  as  the  underlying  economic  factors 
have  pointed  our  attention  first  to  the  sea,  then  to  the 
riches  inland,  our  merchant  marine  in  the  century  past  has 
measured  the  extent  of  our  dependence  upon  foreign  trade. 
"They  that  go  down  to  the  sea  in  ships,  that  do  business  in 
great  waters,"  they  who  build  up  the  seafaring  spirit  of 
the  people,  do  so  because  surplus  products,  surplus  eflPorts, 
find  there  the  outlet  which  means  individual  and  national 
prosperity. 


35 


ESTABLISHED  i8lo 

The  Mechanics  &^  Metals 
National  Bank 

of  the  City  of  New  York 
20   NASSAU    STREET 


Capital,  Surplus  and  Profits — $27,000,000 


I 


,1 


'branches 

25  Broadway 
Columbus  Avenue  and  93rd  Street     First  Avenue  and  103rd  Street 
Madison  Avenue  and  60th  Street       Broadway  and  86th  Street 
Seventh  Avenue  and  58th  Street       Amsterdam  Ave.  and  125th  Street 
Third  Avenue  and  116th  Street  Second  Avenue  and  14th  Street 


!»•«. 


Officers 

Gates  W.  McGarrah  President 
John  McHugh  Vice-President 


Frank  O.  Roe  Vice-President 
Harry  H.  Pond  Vice-President 
Samuel  S.  Campbell  Vice-President 
Joseph  S.  House  Cashier 
Ernest  W.  Davenport  ^45^^.  Cashier 


TRUST  department 

Raymond  H.  See  Manager 


Arthur  M.  Aiken  Asst.  Cashier 
William  E.  Lake  Asst.  Cashier 
Arthur  W.  McKay  Asst.  Cashier 
Clifton  Stanton  Asst.  Cashier 
Alexander  F.  Bryan  Auditor 


foreign  department 
Carl  Schulz  Manager 


BOND  department 

M.  G.  B.  Whelpley  Manager 


»iii*l;'_-7^7J:*.i  " 


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